YUANYUAN GONG

In the recent decade, outward foreign direct investment (OFDI) from emerging markets increased significantly. Although it is only a small percentage among OFDI from emerging markets, cross-border M&As against companies in developed countries have risen in a fast pace and a rich body of research has been studying this phenomenon. The aim of the paper is twofold: first it attempts to explain the influence factors on emerging market firms' choice of entry-mode into developed markets (i.e. M&A or greenfield). Second, it attempts to provide additional explanation for what triggers M&As in developed countries by firms from emerging markets. Existing literature explains that emerging market firms internationalize in order to gain access to strategic resources, know-how and brand names and that in the case of China the government actively promotes outward FDI flows since 1999. We pointed out that it is also important to consider the industry-level condition of host country and whether Chinese firms had inward foreign experience prior to their entry to developed markets. We collected data on Chinese firms' OFDI activity toward Japan in the period during 2002 to 2011. We tested our hypotheses on a sample of 75 cases of investment by Chinese firms and found that lower industry growth rates and higher inward international experience coincided with a higher likelihood of M&A.

Chinese firmsʼ equity acquisition and M&A of Japanese firms are relatively new phenomena, and the strategic issues have not been fully examined yet, including the intent of acquisition by acquiring firms and the mechanism of resource exploitation of target firms.<br>After reviewing existing researches on these strategic issues, we aim to examine the issues in this study, focusing on Renown and Ruyi as case studies. As a result, we point out the followings: 1) The companies in emerging economies may play a role of "internationalization agents" and 2) we need to theorize the internationalization of firms as a process of building a new competitive advantage through bridging a gap regarding the evaluation of their managerial resources between acquiring and acquired firms.